GERALD W. GRANDEY

Mr. Chairman and members of the Subcommittee, my name is Gerald Grandey. I am President of Energy Fuels Nuclear, Inc. (EFN), and I am appearing today on its behalf.

I. General Comments Concerning H.R. 918

I commend the Subcommittee for holding field hearings on H.R. 918. Such hearings are essential for a bill that uniquely affects the citizens in western public land states .

However, after four field hearings and scores of witnesses, it is disturbing that the level of discussion concerning the bill and its effect on the General Mining Law remains, for the most part, polarized and superficial. With few exceptions, the positions of the debaters within the "no change" to "repeal" spectrum appear to be cast in cement. Both sides question the other side's motives; distrust reigns.

From those in favor of wholesale repeal, we are still hearing broad brush emotional appeals geared more for television soundbites than intelligent dialogue. One of their major arguments for change continues to be the age of the Mining Law.

For them, a 119 year-old law cannot possibly address today's problems and concerns--no matter how many times it has been amended since

1872.

From the other side, the "no-changers" are still maintaining that any modifications to the General Mining Law will crumble the bedrock of the entire hardrock mining industry. And, ironically, they are using the age of the Mining Law to prove its adaptability and continued vitality.

Behind the polarized, often rhetorical statements, lies what we believe to be the true issue presented by H.R. 918. It is not whether the Mining Law is outdated, but whether multiple use on public lands will be allowed to continue. Many of us in the mining business are genuinely concerned that many provisions of the bill, if enacted in their present form, will so restrict mining on public lands, and so condition that activity, that the resultant lack of predictability will outweigh the often frail economic incentives that motivate our company and others to risk capital in exploring for mineral deposits. If that result is desired, so be it and let's hit it head on. If not, and I feel confident that the sponsors do not intend such a result, then we should take a hard look at what problems exist with the present language and thrust of H.R. 918 and react responsibly in addressing those problems.

It is in that spirit that as chief executive of the largest uranium exploration and mining company in the country I appear today. I am setting aside my preference to retain the Mining Law in its current form and intend to provide a critical review of

H.R. 918 with confidence that constructive criticism and positive suggestions for achieving balance will be heard and applied.

But I want you to know that I am reluctant to let go of the Mining Law because Energy Fuels' experience in Northern Arizona is an excellent example of how well the Mining Law works.

During the past 13 years, Energy Fuels has staked thousands of unpatented mining claims; discovered and developed nine ore bodies; fully reclaimed four mines and 150 exploration sites; provided hundreds of jobs; contributed $500 million to the local and state economies through payrolls, taxes and direct expenditures; garnered numerous safety, cultural and reclamation awards; and produced enough uranium to electrify a city the size of Phoenix for 200 years.

We have achieved all this exclusively on federal public lands within 40 miles of one of the greatest wonders of the world--the Grand Canyon. Because of our proximity to the Grand Canyon, our operations have not been without controversy. Every step of our activities from exploration through reclamation, has been scrutinized by local residents, environmental groups, the media and, of course, by the federal land managers. Even those who disagree with the basic tenets of the Mining Law and complain bitterly of our right to be there, must admit that EFN's experience illustrates that mining can co-exist with other sensitive natural resource values.

In general, as a producer of an often controversial product in a revered area of the country, my perspective is clear--if the Mining Law is to be changed, its new form must preserve the principles of self-initiation, security of tenure, and most importantly, it must provide an unambiguous right to mine.

II. Specific Comments Concerning H.R. 918, Title II

Specifically, Energy Fuels makes the following comments on H.R. 918. The Subcommittee has heard testimony at earlier hearings from Mr.'s Patrick Garver and Clayton Parr. I wholeheartedly endorse their statements and would like to expand on a few of their key points. For brevity's sake, I am limiting my comments to Title II--Environmental Considerations of Minerals Exploration and Development. Title II is perhaps the most important and the most troubling portion of the bill.

Title II, Section 201 (a) imposes a new standard on mining operations. It requires that mineral activities be conducted to "minimize adverse environmental impacts to the environment".

In addition to being redundant grammatically, the meaning, purpose and ultimate impact of the term are unclear. The new standard would also be duplicative of the workable "unnecessary and undue" degradation standard found in FLPMA. The "unnecessary

and undue" standard reflects the practical recognition that impacts do occur from mining and that minimizing environmental impacts cannot be absolute.

We as a nation, cannot buy into the idea that more regulation of surface disturbing mining activities and more land use planning will eradicate all environmental impacts of mining. Kining does involve environmental impacts that to some will always be considered undesirable. During the last 15 years enactment of scores of environmental laws has built a regulatory environment geared to the protection of public health. The federal surface management regulations and state reclamation laws supplement these standards and also address aesthetic and post-mining land use concerns. But we must acknowledge that if we desire a domestic mining industry, we can only go so far. We believe that an absolutist approach is not a choice that the nation can afford and that Congress will act accordingly by rejecting proposals that follow such a course.

The surface management provisions in Title II appear to be based on an unquestioning acceptance of a perception that all mines (past, present and future) cause unreclaimable environmental damage. Examples of the industry's skeletons (real and imagined) are frequently trotted out for "public edification". EFN, for example, has been accused of having turned northern Arizona into a "nuclear industrial zone", literally glowing with uranium mines, when, in fact, we have not submitted a new plan of operation since 1987 and are not currently mining at all in the area. Our opponents have accused us of crimes such as polluting the Colorado River and contaminating the air in and around the Grand Canyon because as they claim, the ore which we mine is so rich and so radioactive that it does not even have to be milled.

While EFN's experience in Arizona might be an extreme example of the overblown accusations to which the entire industry is subject, it raises some basic and interrelated questions. First, are there examples of mines which have been permitted under contemporary environmental standards that teach us about the adequacy of existing laws? And second, if specific deficiencies are shown to exist, can they more effectively be addressed through the improvement of regulatory systems already in place rather than the implementation of a completely new statutory framework with attendant dislocation and cost to the industry and big budget requirements?

Let me try to help answer these questions. EFN is one of the few companies that have completed the entire cycle, i.e.. exploration, permitting, mining and reclamation, during the last 10-12 years. Consequently, we believe that we are uniquely able to share with you a vision of the "real world" of contemporary mine permitting. Our experience totally belies the rhetoric that contemporary mining and reclamation laws must be revised to adequately protect the public interest.

EFN obtained operating permits for nine mines during this time frame. Eight of the mines were located on BLM land, one on Forest Service land. All of the mines were located in Arizona in

the general vicinity of the Grand Canyon. As you might guess, the location of mines in that general area raises almost every conceivable potential objection concerning environmental impacts and resource conflicts.

The federal agencies involved did not lack authority to provide for protection of the affected resources and to require reclamation. In each case the process functioned in a way that we think is illustrative of the adequacy of the existing regulatory structure. The federal agencies, upon receipt of our mining plans, sought public comment and performed detailed environmental analyses. In each case they coordinated with affected state and local regulatory agencies that have responsibility for protection of some element of the environment. In each case that process led to changes in our proposed plans or operating restrictions that were responsive to public comments or agency requirements. In every case our approval required us to reclaim the affected sites at the conclusion of mining.

We built these mines and have mined four to completion. All four have been totally reclaimed. We invite public scrutiny of the results because they are illustrative of how mining really is regulated under contemporary standards. EFN certainly believes it is a responsible mining company, but if we were not, we can assure you that the terms of our approvals and of existing laws provide adequate authority to the federal agencies to police our efforts.

It is interesting to note that these mines were permitted in Arizona, a state that has repeatedly been characterized as lacking a "reclamation" law. Our experience in Arizona demonstrates several points: First, the federal agencies have plenty of authority under their existing surface management regulations to protect the environment without regard to the existence of a second, third, or fourth level of state or local reclamation regulations. Second, the surface management regulations do not exist in isolation--they supplement a whole host of local, state and federal environmental laws. We must comply with those laws (which are typically incorporated as permit conditions) and the additional discretionary requirements selected by the federal land manager. Finally, the claim that Arizona does not have a "reclamation law is representative of the type of superficial discussion that we find to be misleading Congress. While it may not have something labeled a "reclamation" law, it does have an Environmental Quality Act and Acquifier Protection Permit program that impose operating and closure requirements that are as stringent as any reclamation program we can imagine. In the real world the collection of existing regulatory standards does not appear to have any gaping holes that require a legislative solution.

The President's Council of Economic Advisors recently cautioned Congress about adopting new and inflexible regulatory programs. It noted that "regulatory targets should be chosen by careful cost-benefit analyses, and the methods of regulations should minimize the costs and disruption of reaching their targets. We agree, and emphasize that our experience illustrates that it is unnecessary to impose a new and redundant regulatory program, which would be quite costly, disruptive and, we believe, inefficient. Existing law is working for new mines like ours. If Congress finds a specific inadequacy, it should address it selectively rather than rewriting all the rules.

To proceed selectively, Congress must have facts that illustrate the scope of existing regulation at the state and federal level.

As far as I know, no such study, which would provide a clearer definition of the existence and dimensions of current deficiencies in the law, exists. A study of existing applicable standards in the area of surface and groundwater for example. would require evaluations of the NPDES program under the Clean Water Act, the effect of new storm water runoff regulations, and the RCRA mine waste regulatory program (Strawman) currently being formulated by EPA. In addition, independently functioning state laws relating to mine plan review and permitting requirements and groundwater protection would have to be reviewed. A formidable task, but one which must be tackled before we leap headlong into a whole new statutorily mandated program.

One final note concerning reclamation, H.R. 918 implicitly rejects the National Academy of Sciences' report to the Council on Environmental Quality, commonly known as the "COSMAR Report", which concludes that national reclamation standards are not appropriate for hard rock mining and recommends that appropriate reclamation requirements should be provided in land use plans so that the requirements would be responsive to site-specific conditions. We wonder what basis exists to disregard the COSMAR recommendations.

There is no compelling reason to create a new BLM/USFS bureaucracy to duplicate the current regulatory roles filled by the maturing partnership of state and federal regulation.

Again, using EFN as an example, we have completed reclamation of four of our mines in Arizona during the past five years. We have won widespread approval and national awards for our reclamation work, and our reclaimed mines have become showcases to which we, the BLM and Arizona regulatory agencies escort a steady stream of visitors. We were successful in large part because we were able to work in concert with federal and state agencies to design a reclamation plan which not only adheres to federal laws and regulations, but also fits the unique, site-specific circumstances of northern Arizona. Under the current program, we were